Description
A Distinct Marketing Tool (Special reference to Pharma Industry)
Branding - A Distinct Marketing Tool
1
Branding- A Distinct Marketing Tool
(Special reference to Pharma Industry) K.V.ANANTHA KUMAR
[email protected] Faculty, School of Management Studies, Chaitanya Bharathi Institute of Technology, Gandipet, Hyderabad
Dr. C.N.KRISHNA NAIK
Professor, Sri Krishnadevaraya Institute of Management, Srikrishna Devaraya University, Anantapur.
INTRODUCTION Even if you did not invent, discover or patent the drug, now you can give your name to the medicine and claim rights on it. Since times immemorial, men started “branding” their cattle with hot irons to distinguish theirs from others.’ That initial concept of branding has evolved into branded products, licensing revenues, distribution channels, and franchising. Using creative brands and expanding the reach of their products, pharmaceutical industry, to a large extent, was still working with drug names, which were reminders of the chemical entities in the medicine. But, the industry has witnessed a change in the past decade. Pharmaceutical companies have started launching drugs with innovative names/brands and have been advertising to gain popularity for the brand names. There is now a significant focus to
promote the brand names as the company’s name to create a market advantage. Though a company’s patented drug is not as good as generics, or if it is more expensive than generics, still branding the drug will enable the company to push its sales. Realizing the importance of branding, the big pharma companies in 2003 spent about $25.3 billion on marketing, which was almost as much as on R&D ($33.2 billion). Thus Branding has become need of the hour for the pharma companies. In the present paper an effort is made to bring in front how branding affects the pharma companies. Section 1 of the paper explains the role of corporate and product branding. Section 2 explains how the pharma companies got benefited with branding. It brings before the most popular brand recalls. Section 3 deals with how the pharma
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companies lost in terms of sale and market share because of counterfeiting and knock offs. What should be done to minimize the loss.Section 4 concludes the discussion on pharma branding. 1. CORPORATE BRAND VS PRODUCT BRAND Branding is a very important aspect in pharmaceutical industry. Brands have become synonymous with corporate value. While corporate brands distinguish one company from another, product brands differentiate the products of one company from that of the other. Product brands give unique identity to a company’s product even in the most competitive of markets. A successful brand is considered as a company’s most valuable asset, as it not only ensures repeat sales for the company but also leverages its intangible value. Reinforcing the importance of branding, especially in pharma industry, Tara Rehl (Rehl), Relationship Marketing Manager for Brand Development at Pfizer, said, “Historically, product branding has been prominent in the industry due to greater technological differentiation and to the patent system. Additionally, the intellectual property rights granted to a new molecule contribute to the ‘product brand on a pedestal’ approach to
branding in the pharmaceutical industry.” Mike Rea, MD of IdeaPharma says, “The corporate brand does the work of the product brand before launch – it builds a reputation. That’s why people are doing it.” 2 The companies focusing on corporate branding felt that corporate branding would work well with doctors, since a doctor would prefer to meet the sales representative of a well-branded company than a poorly branded one. Since decades, the system followed in pharma industry was this: invent a new drug, patent it, introduce it to a doctor through a sales representative, and get the prescriptions filled by the doctor. This automatically generated sales and ensured profits, as the drug was patented, which means that there would be no competitors. Branding is more conspicuous at the corporate level than at the product level, and building a strong brand identity is still in its nascent stage in pharma industry. For this reason, there was not a single pharma brand or company name in the Top 25 list of the Interbrand / Business Week’s ‘Most Valuable Brands’ in 2002. 2. BRANDING THE BENEFITS TO COMPANIES Most pharma companies have
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not understood the significance of product branding, with the exception of a few companies such as Pfizer, GlaxoSmithkline, Eli Lilly, Merck, Bayer, Bristol Myers Squibb, Abbott Labs, etc., who have branded some of their products that became very popular worldwide. Eli Lilly branded its drug “Prozac,” and introduced it in 1986. When Prozac was introduced, not a single study submitted by Eli Lilly to the US Food & Drug Administration (USFDA) mentioned that the drug, when taken alone, was efficacious in curing depression. However, once the drug was approved by USFDA, Eli Lilly aggressively marketed Prozac as a revolutionary substance that selectively targeted serotonin, a brain chemical. Their marketing campaign highlighted the fact that, unlike the cheap generics, Prozac did not affect norepinephrine, which produced side effects. This marketing programme catapulted Prozac to a blockbuster drug category. Prozac is now a very popular medicine and the most prescribed anti-depressant across the world. Prozac is taken by more than 35 million people globally, and it contributes more than $3 billion annually to Eli Lilly’s sales. Eli Lilly has branded several of its drugs which have paid rich dividends to the company’s topline and bottomline (See Table-1).
Similarly, Bayer branded the drug “Aspirin” and introduced it in 1899. The brand attained a dominant position in the world within a short period. In the U.S., more than 50 million people take Aspirin in a day, which comes up to 15 billion tablets a year. Bayer’s sales revenues also soared because of its initiatives in branding its drugs. Several of its branded drugs became global best sellers (See Table-2). If the branding is right, then sometimes the product brand may overtake the corporate brand (See Table-3). For instance, more people remember the product brand ‘Viagra’ more vividly than the corporate brand ‘Pfizer.’ Viagra was approved by the USFDA in 1998. Sildenafil Citrate (Viagra) was originally developed as a medicine for chest pain in men and was later discontinued in the wake of unsatisfactory results in a phase-I angina study. However, it was observed that men who took 50 mg and 75 mg doses of Sildenafil Citrate reported increased tendency for erections. This shifted the focus of the drug from angina to erectile dysfunction (also called impotence). Within one year of its launch in the market, Viagra achieved sales of $ 1 billion, thus becoming a block-bluster drug. In 2004, Viagra’s sales touched $ 1.87 billion.
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Similarly, ‘Aspirin’ is more popular than ‘Bayer.’ Many of P&G’s individual products such as Pampers, Crest, Head & Shoulders, Mr. Clean, Old Spice, Lacoste, Oral-B, Pantene, etc., are identified better by their brand names than the company that produces them. Brands evoke feelings of trust, integrity, and value for money, association, and pride in the consumer. TABLE-1 SALES OF ELI LILLY’S POPULAR DRUG BRANDS
Brand name of the Drug Zyprexa Gemzar Humalog Evista Humulin Strattera Actos Humatrope ReoPro Forteo Xigris Cialis 2003($ Million 4,276 1,021 1,021 922 1,060 370 431 370 364 65 160 73 2004( 4
Source: www.lilly.com
Brand Name of Drug Ciprobay / Cipro € Million 837 670 615 318 278 193 171
TABLE-2 BAYER’S BEST SELLING PHARMA BRANDS – 2004
Adalat Aspirin A valox / A velox Glucobay Levit ra
Source: www.lilly.com
Trasylol
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The recall of branded drugs that were advertised had a deeper impact on the consumers. According to a survey conducted by the Kaiser Family Foundation of patients in November 2001, 44% of the patients who saw a branded drug being advertised for a particular ailment and asked the doctor to prescribe it were indeed prescribed by the doctor. Branding plays a decisive role in the pharma industry. For prescription drugs, it plays a B2B role while for OTC drugs, it plays a direct role with the consumers. For instance, Pfizer sells its fertilizer products directly to the consumers. In this scenario,
branding becomes indispensable for any pharma company, since its drugs comprise both prescription drugs as well as OTC drugs. The idea of brand has caught on with the consumers so much so that patients now associate a disease with the brand name of the drug. Prozac has become synonymous with depression; high cholesterol elicits the name of Lipitor; and hay fever (also called pollinosis) reminds of Claritan. The following table presents a list of branded drugs that have become synonymous with the ailment and evokes instant brand recall:
TABLE-3 RECALL OF BRANDED DRUGS
Brand Name Dettol / Savlon / Band- Aid Burnol Viagra Aspirin Coldarin / D’Cold Benadryl Krack Cream Iodex / Amrutanjan / Tiger B alm / Zandu Balm/ Moov Colgate Itch Guard Dermi Cool / Nycil Eno Baygon Spray Ai Burns, cuts, Anti-septic, c Erectile dysf Headaches, Cold Cough Cracked hee Sprains, hea Dent al proble Itching, skin Prickly heat Indigestion ( Insect-killer
Pharma companies have now started seriously working on developing their brands even before their product is fully tested and ready. Pharma companies and markets have
never witnessed such intense brand competition as it is today. The number of sales representatives for pharma brands seeking the health providers has more than doubled over the last
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10 years. Because of innumerable ‘me-too’ and look-alike pharma brands that compete with the established brands, branding has now assumed increased significance. Pharma branding is vital as it not only creates public awareness about the potential benefits of the drugs but also distinguishes a company and its products from other competitors. Branding enables a company to stay ahead of the competition. It increases the sales revenue of the company and also its corporate value (See Table-4). For instance, according to a survey by Interbrand in July 2005, the top 10 brands accounted for a cumulative value of over $388,359 million at an average of 34.8% market
capitalization for those companies. Branding acts as the primary driver of customer purchase decision. Whenever a consumer has to choose between buying a known branded product and an unknown, new product, he will always opt for the former. Branding is directly proportional to the sales revenue of a company. The higher the brand perception and the stronger the brand value, the greater will be the sales revenue and profits for the company that owns the brand. Howard Kosgrove, Vice-principal of Marketing at Lindsay, Stone and Briggs Advertising, says “The value of brand is huge compared to physical assets.”
TABLE-4 TOP TEN BRANDED DRUGS BY SALES DOLLARS (2001-2004)
Company Name Pfizer Takeda/A bbott Merck Astra Zeneca Pfizer Glaxo Smithline Wyeth Bristol Myers Squib Pfizer Warner Lambert Brand Name Lipitor Prevacid Zocor Nexium Zoloft Advair Diskus Effexor XR Plavix Celebrex Neurontin Sales ($ Billion) 2001 4.5 3.2 2.7 0.5 2.2 0.5 1.2 0.9 2.4 1.5 Rank 2002 1 3 4 62 6 63 22 35 5 16 5.2 3.4 3.1 1.8 2.4 1.4 1.5 1.3 2.4 1.8 Rank 1 2 4 10 6 20 16 25 5 11 2003 5.5 3.6 3.3 2.7
2.0 2.0 1.7 2.2 2.1
Source: www.drugtopics.com
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Bertek Pharma, a branded products subsidiary of Mylan Labs Inc., increased its brand sales by 47% from $83 million in 1999 to $122 million in 2000. Bertek’s brand sales contribution to Mylan Labs also increased from 11% of net sales in 1998 to 15% of net sales in 2000. Branding enabled six diabetes drugs to achieve sales of about $1 billion in 2001. Astra Zeneca also launched and promoted a new branded drug for heart burns called ‘Prilosec.’ The drug costs $4 for a single pill and for a year’s consumption; it costs around $1500 for a single patient. This drug became a cash cow for Astra Zeneca and also the world’s No.1 prescription drug with sales of about $6 billion per annum. In 1998, Prilosec became the first ever drug in the world to touch the $5 billion global sales. In 2001, General Motors bought Prilosec worth $55 million for its employees. All these examples make us realize that branding definitely do lot of good to the pharma companies. 3 COUTERFEITING AND KNOCK OFFS Counterfeit drugs and products have always been on the rise, cashing in on the popular drug brands. As per the USFDA estimates, counterfeit drugs account for approximately 10% of the global pharma market. It causes
a loss of $512 billion globally. Stealing of trademarks of very popular companies in pharma and other industries also, and coining trademarks that is similar to others, or cashing in on the popularity of other brands, is continuously on the rise (See Table-5). P&G’s Vicks Action brand was also imitated in December 1998 by counterfeit manufacturers. The six counterfeiting brands were named as – Endo Action, Anadol Action, Jet Action, API Action, Vicas and Vikas cough drops. However, P&G sued those manufacturers for infringement in January 1999 and won the case, which resulted in withdrawal of the counterfeit products. During October to December 1999 P&G lost 5% of the sales from the health care business due to counterfeiting. To avoid the competitor companies from coming with counterfeiting products the companies should constitute trade mark protection teams to have constant market vigilance. The companies should work in conjunction with brand protection committees to protect their brand identity and to sue the infringers for counterfeiting. The trademark filing statistics released by the USPTO, the European Community Trade Mark Office, and the China Trade Mark Office for the
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year 2004 indicate that brand protection is being given more importance by companies. The trademark filings at USPTO increased 12% from 267,218 in 2003 to 298,489 in 2004; while at the European Trademark Community Office it increased 2% from 57,646 in
2003 to 58,848 in 2004; and in China Trade Mark Office, the trademark filings increased 30% from 452,000 in 2003 to 588,000 in 2004. The trademark filings of 588,000 at the China Trade Mark Office for the year 2004 are the highest since the trademark office’s inception in 1994
TABLE-5 RECENT KNOWN CASES OF MISUSE OF TRADEMARKS
Original Trademark Amoxil Fortwin Arelon Pacitane Lipitor Vicks Action Vicks Godrej Lymoxyl Ostwin Arteelon Parkitane Lipicor Endo Action Vikas/Vicas Podrej Cou
Source: Compiled from www www.paultan.org and other sources
blonnet.com,
www.lexorbis.com,
Counterfeiting is prevalent in different countries across the world (See Table 6). The best way to counterattack counterfeiting is to protect it by registration and keep a vigil in the market to pre-empt infringement. The cost of registering a trademark is very less as compared to the cost of litigation. Counterfeiting not only results in loss of sales revenue but also results in damaging the reputation of the global brands.
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TABLE-6 LEADING GLOBAL PRODUCERS OF COUNTERFEIT DRUGS
Rank 1 2 3 4 5 6 7 8 9 India China Brazil Argentina Pakistan Columbia Mexico Belize
Country
Southeast Asia
Source: Center for Pharmaeconomics Studies, University of Texas, Austin.
CONCLUSION During the year 2001, the ranking of the 100 highest selling pharma brands globally included six diabetes drug brands, which clocked an aggregate sale of $8.2 billion. The top six brands of Astra Zeneca contribute 80% to the company’s sales. This emphasizes the importance of branding in positioning a company in a competitive market and also in its overall market performance in a dynamic environment. The companies’ shift from focus on physical assets to intangible assets, such as brand name and patents, is now clearly visible. Having understood the importance of intangible assets and branding for his
company, Yutaka Kobayashi, President and COO of Kobayashi Pharma, said, “In implementing our corporate brand management initiatives, we have understood that the basic foundation of company strength has changed. Previously, a strong company would have had large tangible assets such as land, buildings, and facilities. However, in today’s business environment, a company’s competitive strength will not be judged on the size of its assets, but on how efficiently those assets are marshaled and employed. Corporate brand is one of the most important intangible assets, equivalent in importance with a company’s intellectual assets and human resources. Thus, we have decided that to ensure our future growth, we
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must ensure our corporate brand.”1 Branding helps the company in extending its product line and product lifecycle. Whenever the company wants to introduce new products or value-added services, it will always try to combine them more proximately with the already created brand awareness. Says Jeff Smith, Associate Partner at Prophet Management Consultancy, “Without the presence of a valuable brand, line extensions become merely a regulatory tactic. With the existence of an extendable brand, a franchise is able to capture the minds and hearts of individuals and is able to leverage the trust that has been built up over the years.”2 A good brand offers the company adequate time to respond to competitive threats of other companies, which may be unexpected and sudden. Brand loyalty provides the company the necessary time to plan and execute its strategies to counterattack its competitors, as the brand loyal customers will not switch to a competitor brand immediately. We have seen how branding helped many pharma companies to be benefited and how counterfeiting can be minimized with the use of branding. Thus branding and managing the brands in the pharma industry has become an only
alternative for continuous and constant progress of the companies. REFERENCES & BIBLIOGRAPHY 1. Colyer, Edwin, “Products That Rise Above Their Corporate B r a n d s , ” www.brandchannel.com, December 8, 2003. 2. Marsh, Jeff, “Pharmaceutical B r a n d i n g , ” www.logodesignworks.com. 3. “Current and Future Diabetes Blockbusters: Non-injected Insulins – Hype, Hope or Reality?” www.nhionline.net, January 13, 2003. 4. “Message from the COO,” www.kobayashi.co.jp, April 2002. 5. “Letter to Shareholders,” www.mylan.com, 2000. 6. “Best Global Brands – FAQ,” www.interbrand.com, October 5, 2005. 7. “Branding Excellence,” www.rolandberger.com. 8. Lopez, Maria, and Reisner, Lori, “Is the Brand Name Drug Really Better Than the Generic?” www.pamf.org, 2001.
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9. Colyer, Edwin, “A Global Dose for Local Market,” www.brandchannel.com. 10. Meadows, Michelle, “Greater Access to Generic Drugs,” www.fda.gov, 2003. 11. Brown, Helen, “Dealing With the Generic Threat,” www.prophet.com, September 14, 2005. 12. Schroff, Karl, “Why Pharma Branding Doesn’t Work,” www.biotechmedia.com, October 2003. 13. “Designing Brands for the Pharma Industry,” www.brandinstitute.com. 14. Unnikrishnan CH, “Ten Pharma Companies Line Up at DCGI Office for Approval to Launch Sildenafil Citrate Despite Gloomy Market,” www.pharmabiz.com, September 22, 2000. 15. Javed, Naseem, “Don’t Touch Google’s Name,” www.indiainfoline.com, May 2, 2005. 16. “Building Your Brand,” www.va-interactive.com. 17. Bowman, M. Lisa, “High Court to Hear Copycat-Products Case,” www.news.com.com, June 18, 2001.
18. Bowman, M. Lisa, “Court Case Spurs Copycat Concerns,” www.news.com.com, February 28, 2001. 19. Datta, Kausik, and Sangani Priyanka, “Tatas Win Yet Another Brand Battle,” www.in.rediff.com, October 6, 2005. 20. “When Does it Make Sense to Register Trademarks and Copyrighted Material?” www.sachnoff.com, February 28, 2005. 21. “Mars Incorporated Protects its Brand,” www.ipaustralia.gov.au. 22. Sunderdick, Molly, “Brandnameitis: The Incoherence of Naming in the Pharmaceutical Industry,” www.ezinearticles.com. 23. “Similar Domain Names,” www.doctorebiz.com. 24. Olivier, Darren, and Olsen, John, “How to Make the Business of Brands Work for You,” www.managingip.com. 25. Regan, Keith, “Infringement an Increasing Concern Among US Firms,” www.boston.bizjournals.com, September 24, 2004.
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26. Peter, Anna, “Fake Facts,” www.blonnet.com, March 20, 2003. 27. Robins, Rebecca, “Brand Matters: The Lingua Franca of Pharmaceutical Brand Names,” www.brandchannel.com, March 31, 2006. 28. “Viagra,” www.pubs.acs.org. 29. “The Naming of Drug Products,” www.pharmacytrainer.com.
30. Bates, David, “Brand-name Pharma May Win Broad Protections,” www.gsnmagazine.com, December 2005. Shankaran, Sanjiv, “Pharmaceuticals: Where is the Upper?” ww.thehindubusinessline.com, June 24, 2001.
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doc_280715516.pdf
A Distinct Marketing Tool (Special reference to Pharma Industry)
Branding - A Distinct Marketing Tool
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Branding- A Distinct Marketing Tool
(Special reference to Pharma Industry) K.V.ANANTHA KUMAR
[email protected] Faculty, School of Management Studies, Chaitanya Bharathi Institute of Technology, Gandipet, Hyderabad
Dr. C.N.KRISHNA NAIK
Professor, Sri Krishnadevaraya Institute of Management, Srikrishna Devaraya University, Anantapur.
INTRODUCTION Even if you did not invent, discover or patent the drug, now you can give your name to the medicine and claim rights on it. Since times immemorial, men started “branding” their cattle with hot irons to distinguish theirs from others.’ That initial concept of branding has evolved into branded products, licensing revenues, distribution channels, and franchising. Using creative brands and expanding the reach of their products, pharmaceutical industry, to a large extent, was still working with drug names, which were reminders of the chemical entities in the medicine. But, the industry has witnessed a change in the past decade. Pharmaceutical companies have started launching drugs with innovative names/brands and have been advertising to gain popularity for the brand names. There is now a significant focus to
promote the brand names as the company’s name to create a market advantage. Though a company’s patented drug is not as good as generics, or if it is more expensive than generics, still branding the drug will enable the company to push its sales. Realizing the importance of branding, the big pharma companies in 2003 spent about $25.3 billion on marketing, which was almost as much as on R&D ($33.2 billion). Thus Branding has become need of the hour for the pharma companies. In the present paper an effort is made to bring in front how branding affects the pharma companies. Section 1 of the paper explains the role of corporate and product branding. Section 2 explains how the pharma companies got benefited with branding. It brings before the most popular brand recalls. Section 3 deals with how the pharma
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companies lost in terms of sale and market share because of counterfeiting and knock offs. What should be done to minimize the loss.Section 4 concludes the discussion on pharma branding. 1. CORPORATE BRAND VS PRODUCT BRAND Branding is a very important aspect in pharmaceutical industry. Brands have become synonymous with corporate value. While corporate brands distinguish one company from another, product brands differentiate the products of one company from that of the other. Product brands give unique identity to a company’s product even in the most competitive of markets. A successful brand is considered as a company’s most valuable asset, as it not only ensures repeat sales for the company but also leverages its intangible value. Reinforcing the importance of branding, especially in pharma industry, Tara Rehl (Rehl), Relationship Marketing Manager for Brand Development at Pfizer, said, “Historically, product branding has been prominent in the industry due to greater technological differentiation and to the patent system. Additionally, the intellectual property rights granted to a new molecule contribute to the ‘product brand on a pedestal’ approach to
branding in the pharmaceutical industry.” Mike Rea, MD of IdeaPharma says, “The corporate brand does the work of the product brand before launch – it builds a reputation. That’s why people are doing it.” 2 The companies focusing on corporate branding felt that corporate branding would work well with doctors, since a doctor would prefer to meet the sales representative of a well-branded company than a poorly branded one. Since decades, the system followed in pharma industry was this: invent a new drug, patent it, introduce it to a doctor through a sales representative, and get the prescriptions filled by the doctor. This automatically generated sales and ensured profits, as the drug was patented, which means that there would be no competitors. Branding is more conspicuous at the corporate level than at the product level, and building a strong brand identity is still in its nascent stage in pharma industry. For this reason, there was not a single pharma brand or company name in the Top 25 list of the Interbrand / Business Week’s ‘Most Valuable Brands’ in 2002. 2. BRANDING THE BENEFITS TO COMPANIES Most pharma companies have
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not understood the significance of product branding, with the exception of a few companies such as Pfizer, GlaxoSmithkline, Eli Lilly, Merck, Bayer, Bristol Myers Squibb, Abbott Labs, etc., who have branded some of their products that became very popular worldwide. Eli Lilly branded its drug “Prozac,” and introduced it in 1986. When Prozac was introduced, not a single study submitted by Eli Lilly to the US Food & Drug Administration (USFDA) mentioned that the drug, when taken alone, was efficacious in curing depression. However, once the drug was approved by USFDA, Eli Lilly aggressively marketed Prozac as a revolutionary substance that selectively targeted serotonin, a brain chemical. Their marketing campaign highlighted the fact that, unlike the cheap generics, Prozac did not affect norepinephrine, which produced side effects. This marketing programme catapulted Prozac to a blockbuster drug category. Prozac is now a very popular medicine and the most prescribed anti-depressant across the world. Prozac is taken by more than 35 million people globally, and it contributes more than $3 billion annually to Eli Lilly’s sales. Eli Lilly has branded several of its drugs which have paid rich dividends to the company’s topline and bottomline (See Table-1).
Similarly, Bayer branded the drug “Aspirin” and introduced it in 1899. The brand attained a dominant position in the world within a short period. In the U.S., more than 50 million people take Aspirin in a day, which comes up to 15 billion tablets a year. Bayer’s sales revenues also soared because of its initiatives in branding its drugs. Several of its branded drugs became global best sellers (See Table-2). If the branding is right, then sometimes the product brand may overtake the corporate brand (See Table-3). For instance, more people remember the product brand ‘Viagra’ more vividly than the corporate brand ‘Pfizer.’ Viagra was approved by the USFDA in 1998. Sildenafil Citrate (Viagra) was originally developed as a medicine for chest pain in men and was later discontinued in the wake of unsatisfactory results in a phase-I angina study. However, it was observed that men who took 50 mg and 75 mg doses of Sildenafil Citrate reported increased tendency for erections. This shifted the focus of the drug from angina to erectile dysfunction (also called impotence). Within one year of its launch in the market, Viagra achieved sales of $ 1 billion, thus becoming a block-bluster drug. In 2004, Viagra’s sales touched $ 1.87 billion.
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Similarly, ‘Aspirin’ is more popular than ‘Bayer.’ Many of P&G’s individual products such as Pampers, Crest, Head & Shoulders, Mr. Clean, Old Spice, Lacoste, Oral-B, Pantene, etc., are identified better by their brand names than the company that produces them. Brands evoke feelings of trust, integrity, and value for money, association, and pride in the consumer. TABLE-1 SALES OF ELI LILLY’S POPULAR DRUG BRANDS
Brand name of the Drug Zyprexa Gemzar Humalog Evista Humulin Strattera Actos Humatrope ReoPro Forteo Xigris Cialis 2003($ Million 4,276 1,021 1,021 922 1,060 370 431 370 364 65 160 73 2004( 4
Source: www.lilly.com
Brand Name of Drug Ciprobay / Cipro € Million 837 670 615 318 278 193 171
TABLE-2 BAYER’S BEST SELLING PHARMA BRANDS – 2004
Adalat Aspirin A valox / A velox Glucobay Levit ra
Source: www.lilly.com
Trasylol
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The recall of branded drugs that were advertised had a deeper impact on the consumers. According to a survey conducted by the Kaiser Family Foundation of patients in November 2001, 44% of the patients who saw a branded drug being advertised for a particular ailment and asked the doctor to prescribe it were indeed prescribed by the doctor. Branding plays a decisive role in the pharma industry. For prescription drugs, it plays a B2B role while for OTC drugs, it plays a direct role with the consumers. For instance, Pfizer sells its fertilizer products directly to the consumers. In this scenario,
branding becomes indispensable for any pharma company, since its drugs comprise both prescription drugs as well as OTC drugs. The idea of brand has caught on with the consumers so much so that patients now associate a disease with the brand name of the drug. Prozac has become synonymous with depression; high cholesterol elicits the name of Lipitor; and hay fever (also called pollinosis) reminds of Claritan. The following table presents a list of branded drugs that have become synonymous with the ailment and evokes instant brand recall:
TABLE-3 RECALL OF BRANDED DRUGS
Brand Name Dettol / Savlon / Band- Aid Burnol Viagra Aspirin Coldarin / D’Cold Benadryl Krack Cream Iodex / Amrutanjan / Tiger B alm / Zandu Balm/ Moov Colgate Itch Guard Dermi Cool / Nycil Eno Baygon Spray Ai Burns, cuts, Anti-septic, c Erectile dysf Headaches, Cold Cough Cracked hee Sprains, hea Dent al proble Itching, skin Prickly heat Indigestion ( Insect-killer
Pharma companies have now started seriously working on developing their brands even before their product is fully tested and ready. Pharma companies and markets have
never witnessed such intense brand competition as it is today. The number of sales representatives for pharma brands seeking the health providers has more than doubled over the last
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10 years. Because of innumerable ‘me-too’ and look-alike pharma brands that compete with the established brands, branding has now assumed increased significance. Pharma branding is vital as it not only creates public awareness about the potential benefits of the drugs but also distinguishes a company and its products from other competitors. Branding enables a company to stay ahead of the competition. It increases the sales revenue of the company and also its corporate value (See Table-4). For instance, according to a survey by Interbrand in July 2005, the top 10 brands accounted for a cumulative value of over $388,359 million at an average of 34.8% market
capitalization for those companies. Branding acts as the primary driver of customer purchase decision. Whenever a consumer has to choose between buying a known branded product and an unknown, new product, he will always opt for the former. Branding is directly proportional to the sales revenue of a company. The higher the brand perception and the stronger the brand value, the greater will be the sales revenue and profits for the company that owns the brand. Howard Kosgrove, Vice-principal of Marketing at Lindsay, Stone and Briggs Advertising, says “The value of brand is huge compared to physical assets.”
TABLE-4 TOP TEN BRANDED DRUGS BY SALES DOLLARS (2001-2004)
Company Name Pfizer Takeda/A bbott Merck Astra Zeneca Pfizer Glaxo Smithline Wyeth Bristol Myers Squib Pfizer Warner Lambert Brand Name Lipitor Prevacid Zocor Nexium Zoloft Advair Diskus Effexor XR Plavix Celebrex Neurontin Sales ($ Billion) 2001 4.5 3.2 2.7 0.5 2.2 0.5 1.2 0.9 2.4 1.5 Rank 2002 1 3 4 62 6 63 22 35 5 16 5.2 3.4 3.1 1.8 2.4 1.4 1.5 1.3 2.4 1.8 Rank 1 2 4 10 6 20 16 25 5 11 2003 5.5 3.6 3.3 2.7
2.0 2.0 1.7 2.2 2.1
Source: www.drugtopics.com
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Bertek Pharma, a branded products subsidiary of Mylan Labs Inc., increased its brand sales by 47% from $83 million in 1999 to $122 million in 2000. Bertek’s brand sales contribution to Mylan Labs also increased from 11% of net sales in 1998 to 15% of net sales in 2000. Branding enabled six diabetes drugs to achieve sales of about $1 billion in 2001. Astra Zeneca also launched and promoted a new branded drug for heart burns called ‘Prilosec.’ The drug costs $4 for a single pill and for a year’s consumption; it costs around $1500 for a single patient. This drug became a cash cow for Astra Zeneca and also the world’s No.1 prescription drug with sales of about $6 billion per annum. In 1998, Prilosec became the first ever drug in the world to touch the $5 billion global sales. In 2001, General Motors bought Prilosec worth $55 million for its employees. All these examples make us realize that branding definitely do lot of good to the pharma companies. 3 COUTERFEITING AND KNOCK OFFS Counterfeit drugs and products have always been on the rise, cashing in on the popular drug brands. As per the USFDA estimates, counterfeit drugs account for approximately 10% of the global pharma market. It causes
a loss of $512 billion globally. Stealing of trademarks of very popular companies in pharma and other industries also, and coining trademarks that is similar to others, or cashing in on the popularity of other brands, is continuously on the rise (See Table-5). P&G’s Vicks Action brand was also imitated in December 1998 by counterfeit manufacturers. The six counterfeiting brands were named as – Endo Action, Anadol Action, Jet Action, API Action, Vicas and Vikas cough drops. However, P&G sued those manufacturers for infringement in January 1999 and won the case, which resulted in withdrawal of the counterfeit products. During October to December 1999 P&G lost 5% of the sales from the health care business due to counterfeiting. To avoid the competitor companies from coming with counterfeiting products the companies should constitute trade mark protection teams to have constant market vigilance. The companies should work in conjunction with brand protection committees to protect their brand identity and to sue the infringers for counterfeiting. The trademark filing statistics released by the USPTO, the European Community Trade Mark Office, and the China Trade Mark Office for the
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year 2004 indicate that brand protection is being given more importance by companies. The trademark filings at USPTO increased 12% from 267,218 in 2003 to 298,489 in 2004; while at the European Trademark Community Office it increased 2% from 57,646 in
2003 to 58,848 in 2004; and in China Trade Mark Office, the trademark filings increased 30% from 452,000 in 2003 to 588,000 in 2004. The trademark filings of 588,000 at the China Trade Mark Office for the year 2004 are the highest since the trademark office’s inception in 1994
TABLE-5 RECENT KNOWN CASES OF MISUSE OF TRADEMARKS
Original Trademark Amoxil Fortwin Arelon Pacitane Lipitor Vicks Action Vicks Godrej Lymoxyl Ostwin Arteelon Parkitane Lipicor Endo Action Vikas/Vicas Podrej Cou
Source: Compiled from www www.paultan.org and other sources
blonnet.com,
www.lexorbis.com,
Counterfeiting is prevalent in different countries across the world (See Table 6). The best way to counterattack counterfeiting is to protect it by registration and keep a vigil in the market to pre-empt infringement. The cost of registering a trademark is very less as compared to the cost of litigation. Counterfeiting not only results in loss of sales revenue but also results in damaging the reputation of the global brands.
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TABLE-6 LEADING GLOBAL PRODUCERS OF COUNTERFEIT DRUGS
Rank 1 2 3 4 5 6 7 8 9 India China Brazil Argentina Pakistan Columbia Mexico Belize
Country
Southeast Asia
Source: Center for Pharmaeconomics Studies, University of Texas, Austin.
CONCLUSION During the year 2001, the ranking of the 100 highest selling pharma brands globally included six diabetes drug brands, which clocked an aggregate sale of $8.2 billion. The top six brands of Astra Zeneca contribute 80% to the company’s sales. This emphasizes the importance of branding in positioning a company in a competitive market and also in its overall market performance in a dynamic environment. The companies’ shift from focus on physical assets to intangible assets, such as brand name and patents, is now clearly visible. Having understood the importance of intangible assets and branding for his
company, Yutaka Kobayashi, President and COO of Kobayashi Pharma, said, “In implementing our corporate brand management initiatives, we have understood that the basic foundation of company strength has changed. Previously, a strong company would have had large tangible assets such as land, buildings, and facilities. However, in today’s business environment, a company’s competitive strength will not be judged on the size of its assets, but on how efficiently those assets are marshaled and employed. Corporate brand is one of the most important intangible assets, equivalent in importance with a company’s intellectual assets and human resources. Thus, we have decided that to ensure our future growth, we
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must ensure our corporate brand.”1 Branding helps the company in extending its product line and product lifecycle. Whenever the company wants to introduce new products or value-added services, it will always try to combine them more proximately with the already created brand awareness. Says Jeff Smith, Associate Partner at Prophet Management Consultancy, “Without the presence of a valuable brand, line extensions become merely a regulatory tactic. With the existence of an extendable brand, a franchise is able to capture the minds and hearts of individuals and is able to leverage the trust that has been built up over the years.”2 A good brand offers the company adequate time to respond to competitive threats of other companies, which may be unexpected and sudden. Brand loyalty provides the company the necessary time to plan and execute its strategies to counterattack its competitors, as the brand loyal customers will not switch to a competitor brand immediately. We have seen how branding helped many pharma companies to be benefited and how counterfeiting can be minimized with the use of branding. Thus branding and managing the brands in the pharma industry has become an only
alternative for continuous and constant progress of the companies. REFERENCES & BIBLIOGRAPHY 1. Colyer, Edwin, “Products That Rise Above Their Corporate B r a n d s , ” www.brandchannel.com, December 8, 2003. 2. Marsh, Jeff, “Pharmaceutical B r a n d i n g , ” www.logodesignworks.com. 3. “Current and Future Diabetes Blockbusters: Non-injected Insulins – Hype, Hope or Reality?” www.nhionline.net, January 13, 2003. 4. “Message from the COO,” www.kobayashi.co.jp, April 2002. 5. “Letter to Shareholders,” www.mylan.com, 2000. 6. “Best Global Brands – FAQ,” www.interbrand.com, October 5, 2005. 7. “Branding Excellence,” www.rolandberger.com. 8. Lopez, Maria, and Reisner, Lori, “Is the Brand Name Drug Really Better Than the Generic?” www.pamf.org, 2001.
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9. Colyer, Edwin, “A Global Dose for Local Market,” www.brandchannel.com. 10. Meadows, Michelle, “Greater Access to Generic Drugs,” www.fda.gov, 2003. 11. Brown, Helen, “Dealing With the Generic Threat,” www.prophet.com, September 14, 2005. 12. Schroff, Karl, “Why Pharma Branding Doesn’t Work,” www.biotechmedia.com, October 2003. 13. “Designing Brands for the Pharma Industry,” www.brandinstitute.com. 14. Unnikrishnan CH, “Ten Pharma Companies Line Up at DCGI Office for Approval to Launch Sildenafil Citrate Despite Gloomy Market,” www.pharmabiz.com, September 22, 2000. 15. Javed, Naseem, “Don’t Touch Google’s Name,” www.indiainfoline.com, May 2, 2005. 16. “Building Your Brand,” www.va-interactive.com. 17. Bowman, M. Lisa, “High Court to Hear Copycat-Products Case,” www.news.com.com, June 18, 2001.
18. Bowman, M. Lisa, “Court Case Spurs Copycat Concerns,” www.news.com.com, February 28, 2001. 19. Datta, Kausik, and Sangani Priyanka, “Tatas Win Yet Another Brand Battle,” www.in.rediff.com, October 6, 2005. 20. “When Does it Make Sense to Register Trademarks and Copyrighted Material?” www.sachnoff.com, February 28, 2005. 21. “Mars Incorporated Protects its Brand,” www.ipaustralia.gov.au. 22. Sunderdick, Molly, “Brandnameitis: The Incoherence of Naming in the Pharmaceutical Industry,” www.ezinearticles.com. 23. “Similar Domain Names,” www.doctorebiz.com. 24. Olivier, Darren, and Olsen, John, “How to Make the Business of Brands Work for You,” www.managingip.com. 25. Regan, Keith, “Infringement an Increasing Concern Among US Firms,” www.boston.bizjournals.com, September 24, 2004.
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26. Peter, Anna, “Fake Facts,” www.blonnet.com, March 20, 2003. 27. Robins, Rebecca, “Brand Matters: The Lingua Franca of Pharmaceutical Brand Names,” www.brandchannel.com, March 31, 2006. 28. “Viagra,” www.pubs.acs.org. 29. “The Naming of Drug Products,” www.pharmacytrainer.com.
30. Bates, David, “Brand-name Pharma May Win Broad Protections,” www.gsnmagazine.com, December 2005. Shankaran, Sanjiv, “Pharmaceuticals: Where is the Upper?” ww.thehindubusinessline.com, June 24, 2001.
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